Henry Blodget Internet Quotations

We have received a number of calls on whether a combination of Yahoo and Disney would make sense. We believe an investment would be much more likely. Given that AOL-Time Warner is likely to be a real entity within a few weeks, creating a very strong global integrated media and Internet competitor, we believe other media companies will be looking to create similarly powerful internet strategies.

We continue to think there is long-term upside potential for the stocks of the leading companies in the Internet sector. Although we acknowledge the potential for appreciation over the intermediate term, we strongly believe that volatility remains a significant risk over this same timeframe and we would stress the long term.

We think the Internet is tremendously profound. It will continue to have an effect on the global economy over the next five-to-10 years. But there's no way that it is a large enough opportunity to support the 400 companies that have gone public. And I think if you look back in history at different emerging industries, we've often had this feeling that the PCs for example are going to change the world. All you have to do is buy a PC company and you're safe. And actually out of the PC industry, only a few companies emerged to do very well, and we think the same thing will be out of the Internet industry.

As the shakeout continues, we continue to believe that the Internet spoils will go to the few, not the many. As one investor we respect put it, anytime a new industry emerges, many turtles hatch, few make it to the sea.

The sentiment surrounding the leading companies in the consumer Internet sector appears to be improving as we approach the seasonally strong fall and winter period. We continue to believe that some of the leading consumer advertising and e-commerce stocks -- America Online, Yahoo, and Amazon.com -- will benefit from this.

The majority of today's pure-play Internet companies will never make money and will not exist in three-to-five years. There will be a lot of consolidation and a lot of failure, and ultimately valuations will fall more in line with historical norms.